Key Metrics for Different Business Models
What metrics do early-stage VCs want to see? Founders will typically present metrics that go with the industry vertical they’re in, but a better approach is to prepare metrics based on your startup’s business model – how you plan to charge your users. Below are 3-5 key metrics each for 8 common business models:
1. Enterprise (e.g. Salesforce, Cloudera)
• Bookings
• Total Customers
• Revenue
2. Software-as-a-Service (e.g. Mailchimp, Sendbird)
• Monthly Recurring Revenue
• Annual Recurring Revenue
• Gross Monthly Recurring Revenue Churn
• Paid Customer Acquisition Cost
3. Subscription (e.g. Dollar Shave Club, HelloFresh)
• Monthly Recurring Revenue
• Monthly Recurring Revenue Compound Monthly Growth Rate
• Gross User Churn
• Paid Customer Acquisition Cost
4. Transactional (e.g. PayPal, Coinbase)
• Gross Transaction Volume
• Net Revenue
• User Retention
• Paid Customer Acquisition Cost
5. Marketplace (e.g. Airbnb, eBay)
• Gross Merchandise Volume
• Net Revenue
• Net Revenue Compound Monthly Growth Rate
• User Retention
• Paid Customer Acquisition Cost
6. E-commerce (e.g. Kotn, Memebox)
• Monthly Revenue
• Revenue Compound Monthly Growth Rate
• Gross Margin
• Paid Customer Acquisition Cost
7. Advertising (e.g. Twitter, Reddit)
• Daily Active Users
• Monthly Active Users
• Percent Logged-In
8. Hardware (e.g. Fitbit, GoPro)
• Monthly Revenue
• Revenue Compound Monthly Growth Rate
• Gross Margin
• Paid Customer Acquisition Cost
It is vital for startups to choose the right metrics that can be used to measure success and for founders to choose what to do based on what will positively impact them. For further reading on these metrics, check out this fantastic article from a16z.